Defense contractor Booz Allen Hamilton has agreed to pay $377 million to settle a long-standing Justice Department lawsuit, according to federal authorities. The lawsuit alleged that Booz Allen Hamilton overcharged the U.S. government in order to cover losses in other areas of its business. This settlement is one of the largest financial settlements for a defense company under the federal False Claims Act.
The Justice Department opened an investigation into Booz Allen Hamilton in 2016 after receiving complaints from a whistleblower. The whistleblower, Sarah Feinberg, claimed that the company was overcharging the federal government to mitigate losses related to its work with the private sector and foreign governments. Feinberg, a former U.S. Marine Corps officer, had worked for the company to improve its accounting.
The lawsuit alleged that Booz Allen Hamilton knowingly collected more than $250 million in fraudulent fees from the United States and projected to collect twice that amount in 2019. The company had publicly disclosed the federal probe in 2017, stating that investigators were examining its cost accounting and indirect cost charging practices with the U.S. government.
The settlement is one of the largest financial awards in cases outside of the health care industry, according to Jacob T. Elberg, a former federal prosecutor. However, Elberg noted that companies are not necessarily required to admit misconduct in such settlements. The company’s criminal probe could still continue, as a related federal criminal investigation was closed in 2021 without charges, while a separate Securities and Exchange Commission probe remains open.
Feinberg, the whistleblower, stands to be personally awarded nearly $70 million of the overall settlement. She expressed hope that the settlement encourages more whistleblowers to come forward when their companies refuse to do the right thing.
Booz Allen Hamilton has not immediately responded to requests for comment on the settlement. The company had previously signaled to stockholders in May that it was anticipating a costly settlement, booking a $226 million write-down related to the case.